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The birth & growth of a cartel in the ICT sector in Zimbabwe | #NetOneGate

By Reward Kangai
28 December 2017
His Excellency Cde. E.D.Mnangagwa, President of the Republic of Zimbabwe
Introduction:
Mid – December 2014, saw the appointment of Hon. Supa Mandiwanzira as the Minister of Information Communication Technologies, Postal & Courier Services, replacing Hon. Webster K. Shamu. This event marked the birth of a cartel in the ICT sector in Zimbabwe as will be fully explained below.
NetOne ‘re-structuring exercise’.
As early as 30 December 2014, out of the blues, the former Chairman of the Board, Mr Alex Marufu indicated in a text message to me that he was going to destroy empires in NetOne. Soon afterwards, there began the talk of re-structuring of NetOne management. There was no basis given for that re-structuring exercise. I was invited to arrange for a lunch with the Minister, Hon. Supa Mandiwanzira at the Meikles Hotel, where he wanted to know why I was against the appointment of Francis Mawindi, former CEO of Telecel, as NetOne Chief Operating Officer (COO) and I gave him my reasons on the basis of his involvement with NetOne’s Easycall prepaid platform under Brightpoint, a company that the late General Mujuru had interests and had supplied NetOne with a mal-functioning prepaid platform that cost NetOne loss of customers during the 1998-1999 period and his exit from PTC. I was later vindicated as he was unsuccessful during the vetting exercise by Government.
During the same lunch, the Minister assured me of my position as CEO of NetOne but he wanted to bring management capacity in the Company. Events that later unfolded suggest that the re-structuring exercise at NetOne was meant to supplant management with his proxies.
Indeed, during that re-structuring exercise, Mrs Sibusisiwe Ndhlovu, formerly Executive Director for Retail banking at MetBank, was appointed Chief Finance Officer at NetOne, replacing Mr Godfrey Tarupuwa, who was the Company’s Finance Director. Mrs Sibusisiwe Ndhlovu had been forced to resign from MetBank, following a forensic audit at Afre Holding (the Pattisson Timba saga at Renaissance Bank) sanctioned by the Reserve Bank of Zimbabwe, found her unsuitable to hold public office.
Following the unsuccessful security clearance of Francis Mawindi for the post of COO at NetOne, Mr Brian Mutandiro was later appointed COO of NetOne, when in fact, he didn’t meet the qualifications called for in the job advert. Details pertaining to that appointment were given to the Zimbabwe Anti-Corruption Commission (ZACC), Commissioner of Investigations, Mr Goodson Nguni on the 14th March 2016. Mr Brian Mutandiro is related to Hon. Supa Mandiwanzira and has been acting CEO of NetOne, since 14th March 2016.
Incidentally, some of the reasons advanced for the failure to security clear Mr Francis Mawindi, relate to his tenure as Telecel CEO. He deposited large sums of Telecel funds into MetBank without the authority of the Board. Telecel was later unable to withdraw the money to meet its licence obligations with POTRAZ, resulting in the cancellation of its licence. Mr Mawindi is closely related to one of the owners of MetBank, hence the motivation to deposit Telecel funds into the Bank, even without the authorisation of the Board of Directors of the Company.
Mr Kudakwashe Nyashanu was appointed Executive Human Resources at NetOne. Mr Nyashanu was previously employed at Tarcon, a company in which Hon. Mandiwanzira has an interest.
The CEO, Reward Kangai, was later dismissed, following a forensic audit, which audit found no evidence of allegations that had been laid against him by Hon. Supa Mandiwanzira and former Board Chairman, Mr Alex Marufu.
Mr Darlington Gutu was retained as Chief Technical Officer. Sources from NetOne indicate that he was assured of being retained in his position, if he came up with incriminating evidence against the former CEO, Reward Kangai during the forensic audit. Indeed, he was a false witness to the forensic auditors as he wrongfully indicated that Reward Kangai had changed sites for base stations, failed to develop base stations etc., which allegations were not supported by facts.
At Board level, the Minister fired 3 Board members at the end of July 2016, namely Mrs Thandiwe Mlobane, Mrs Dorothy Mapimhidze and Mr Shepherd Tsomondo following the submission of the Preliminary forensic audit report, which audit had found no evidence of wrong-doing on the part of NetOne management. This did not go down well with the Minister. The fired Board members were key in the forensic audit process. The fired Board members were immediately replaced by members close to Hon. Supa Mandiwanzira. One of them, Mr Peter Chingoka, is a non-executive director at MetBank and was to be later appointed Chairman of NetOne after Mr Alex Marufu was forced to resign in December 2016. Mr Alex Marufu, despite being Hon. Supa Mandiwanzira’s hatchet man, had to resign as there was increasing pressure on the minister, as Mr Marufu had re-located to South Africa, whilst NetOne was being forced to pay for his travel costs to attend the unusually frequent NetOne Board meetings. Furthermore, he had, with the approval of the Minister, been granted security guards at his Harare home at NetOne’s cost. This matter of Abuse of Office by Mr Alex Marufu was raised with the Chief Secretary to the Office of the President and Cabinet on the 9th December 2016. A copy of the document was presented to ZACC Commissioner for Investigations, Mr Goodson Nguni on the 9th December 2016.  
With the above appointments at Board and Management, NetOne, a State Owned Entity (SOE) has clearly been captured by Hon. Supa Mandiwanzira. The Chairman of the Board, CEO, CFO and Executive Human Resources are all linked to Hon. Supa Mandiwanzira, as will be further expounded.
The MetBank connection
As has been explained earlier, the Chairman of NetOne, Mr Peter Chingoka is a non-executive Director at MetBank. Mrs Sibusisiwe Ndhlovu, Chief Financial Officer at NetOne is formerly a Director at MetBank.
Mr Ozias Bvute, the CEO of MetBank, was appointed Chairman of POTRAZ by the Minister, Hon. Supa Mandiwanzira in April 2016. Brian Mutandiro had previously been appointed by the same Minister to that non-Executive directorship position at POTRAZ but resigned to take up a more lucrative Executive directorship position at NetOne.
The appointment of Mr Ozias Bvute to POTRAZ by Hon. Supa Mandiwanzira was made with the Minister’s full knowledge that at the time, MetBank owed POTRAZ, US$6.5 million, NetOne US$300 000 (the amount was US$700 000 but was reduced after NetOne CEO, Reward Kangai took legal action against MetBank, a move that didn’t go down well with both Minister Mandiwanzira and Ozias Bvute), Communications and Allied Industries Pension Fund (CAIPF) US$1.6million, POSB, US$2million and Zimpost (exact amount unknown). The above entities except POSB and CAIPF are regulated by POTRAZ. Now, POTRAZ administers the Universal Services Fund (USF), a fund that was created by the Postal and Telecommunications Services Act, Chapter 12:05 for the purposes of developing postal and telecommunication services in under-serviced areas that may not be commercially viable for operators to invest in such areas on their own.
Soon after his appointment to the Chairmanship of the POTRAZ Board, Mr Ozias Bvute re-instated the Acting Director General to his position as Deputy Director, who had previously been fired by the Ishmael Chikwenhere’s Board for violating a Board resolution, which had authorised POTRAZ to open an account with MetBank but to limit deposits to a maximum of US$500 000. Mr Bvute went on to direct POTRAZ management to purchase stands at Crowhill, Harare using funds from the USF at US$22.5million, less the US$6.5million already deposited with MetBank, notwithstanding that the intended move was clearly not in line with the mandate of POTRAZ and certainly not in accordance with the intended use of the USF. In an article entitled “Zimdef loses millions in stands scandal”, the Herald in its 20th December 2017 publication, highlights details of how Zimdef lost millions of dollars in a debt-land swap deal, where the value of the stands from the same Crowhill area where grossly overvalued.
Clearly, the appointment of Ozias Bvute to the position of Chairman of POTRAZ, was intended for the purpose of looting State funds for the benefit of a cabal, with the Minister, Hon. Supa Mandiwanzira at the centre of it.
The appointment at POTRAZ which administers the cash rich USF, was tantamount to setting a hyena to look after sheep, as MetBank, a bank that is managed by Mr Bvute, had lost millions of US dollars of depositors’ (largely SOEs and parastatals) monies. Through his connections with powerful ministers, Mr Bvute would coerce CEOs of SOEs and parastatals to open accounts with MetBank and deposit large amounts of cash into MetBank, which monies the institutions would not be able to withdraw. It is rumoured that the Central Intelligence Organisation, CIO had not cleared Mr Bvute’s appointment for the POTRAZ Board Chairmanship but was over-ruled by the Office of the President & Cabinet on instructions from the former First Lady.
Under the POTRAZ Chairmanship of Mr Ozias Bvute, US$10 million of funds from USF were used as part-payment of 60% share-holding in Telecel, a privately owned mobile telecommunications operator. The remaining $30million came from NSSA. NSSA insisted on having a shareholding in Telecel after that payment but Hon. Supa Mandiwanzira is against that, hence NSSA is being re-imbursed for its US$30million through the USF. The Government’s purchase of Telecel, a move that was initiated by Hon. Supa Mandiwanzira, against a background wherein Government of Zimbabwe already owns 100% shareholding in NetOne and have over the years, failed to adequately capitalise the company, cannot possibly be in the interest of the Government of Zimbabwe and its citizens. World-wide, most Governments have been dis-investing from the highly capital intensive mobile communications business as the industry is very attractive to Foreign Direct Investment (FDI), leaving Governments to focus funding on social services like health and education, which are not so attractive to FDI.   It is unlikely that the Minister would have been unaware of the folly of that move but rather, it seems to support speculations that the purchase of Telecel by the Government of Zimbabwe, was only an intermediate step with the ultimate goal of benefitting powerful and well connected individuals. There have been wide rumours that the true intention was to later sell Telecel to Unitel, owned by Isabel dos Santos, daughter of former Angolan President, Eduardo dos Santos for a mere US$10million ‘profit’ meant to whoodwink the public whilst facilitating proxy shareholding to former First Lady and the Minister. This is the only plausible explanation that makes sense in the acquisition of Telecel by Government of Zimbabwe. Already, Telecel has suffered a significant drop in both market share and revenue, since its acquisition by Government, clearly confirming a well known view of Government’s inability to run business, particularly such a highly capital intensive industry like mobile communications. Should Government sell Telecel to a privately owned International mobile operator, NetOne will ultimately flounder, as Government bureaucracy and corruption continue to weigh down heavily on the company. The combined revenue of both Government owned mobile operators, is less than 20% market share, whilst Econet rakes in 85% lion share of the market, as shown by the year 2017, 3rd Quarterly statistics recently published by POTRAZ! NetOne registered the lowest Average Revenue Per User (ARPU), a reflection of the dismal failure of the current management. Yet, the new management under Mr Brian Mutandiro inherited in 2016, a network that had registered an all-time record high number of Greenfield base stations of 148 that were installed in 2015 under the previous management led by the writer. Revenue for year 2016 under Mr Brian Mutandiro only increased by US$1 million, notwithstanding the high number of base stations installed the previous year and the capital investment of US$218 million made during the previous year under my management.
It is rumoured that the Minister, Hon. Supa Mandiwanzira, transferred a US$25 million debt from CBZ Bank to MetBank. Due to bank – client confidentiality, the writer is not in a position to verify this. That verification is best dealt with by Government investigators like the National Economic Conduct Inspectorate (NECI). Should this turn out to be true, it would explain the Minister’s appointments of MetBank directors at POTRAZ and NetOne, to corruptly facilitate the Minister’s debt clearance at MetBank. The reported inflating of the Crowhill stands, seems to be the way State-Owned Enterprises and parastatals have been used by MetBank to prejudice those institutions of millions of State funds. At the time of writing this document, TelOne management was being pressured by the Minister to open an account with MetBank and deposit its funds with that bank. From the experiences of many SOEs, TelOne will not be able to withdraw its funds from that bottomless pit of a Bank and will likely be offered a land swap deal in the notorious Crowhill stands, whose value will have been grossly inflated. TelOne management is very vulnerable to such kind of pressures at this moment as there is no Board of Directors and the Managing Director’s contract of employment has deliberately not been extended, almost a year after expiry.
It is common cause that POTRAZ, NetOne and Zimposts were coerced into opening accounts with MetBank and depositing their cash collections with that bank. The former POTRAZ Director General, Eng. Charles M. Sibanda objected to depositing POTRAZ funds with MetBank, resulting in his contract of employment not being renewed.
It is also pertinent to point out that Tarcon, a Company in which Minister Mandiwanzira has an interest, is contracted to service the Crowhill stands. Thus, Minister Mandiwanzira is a beneficiary of the abuse of SOE funds deposited with MetBank.
It is also interesting to note that the Chairman of MetBank, Mr W. Manase is the lawyer representing the former First Lady on the matter relating to the US$1.35 million diamond ring saga.
Mr W. Manase also represents Bacnet Trading, a Company that was sued by NetOne, along with the Minister of Local Government and National Housing in a dispute wherein the Minister of Local Government was attempting to take some 131 000 hectares of NetOne land at Cleveland, granted under Deed of Grant Registered on the 10th September 1953 (Registration No. 13832) and later under Consent No. 4717/75 on 3/12/1975. Case No. HC 10812/13 of 17 December 2013 refers. The case involves the illegal sub-division of Lot A of Chikurubi private land belonging to NetOne into residential stands, which was done on the instructions of former Local Government and Housing Minister, Ignatius Chombo. Some of the stands went on to be sold for US$60 000 and when the purchasers failed to get title deeds, they reported the matter to the police. When I was forced out of NetOne in March 2016, the case was pending at the Supreme Court, after NetOne had won at the High Court but the respondents appealed at the Supreme Court. The sub-division of the land on Lot A of Chikurubi, is against the conditions set out in the Deed of Grant. A Mr Charles Chombo of Bacnet Trading, was to be the beneficiary of the land that was to be usurped from NetOne through abuse of office by then Minister of Local Government and National Housing.
TelOne
After supplanting NetOne management, the Minister, Hon. Supa Mandiwanzira’s next victim was to be TelOne Managing Director, Mrs Chipo Mtasa and Finance Director, Mrs Ellen Chivaviro. Hon. Supa Mandiwanzira, in a move that bears striking resemblance to what he did at NetOne and has become his hallmark, orchestrated the publication of an article entitled “TelOne reels under a US$378 million debt” in the Zimbabwe Independent newspaper of 24th December 2016. The objective behind the article was a smear campaign against the TelOne Managing Director and Finance Director to justify non-renewal of their Contracts of Employment, as the Minister had so directed the Board. In much the same way, NetOne management was wrongly blamed by the Minister and former Board Chairman, of “siphoning US$11 million of NetOne funds through Firstel”, the article wrongly blamed TelOne management for the US$378 million TelOne debt and yet almost US$300 million of that, was legacy debt incurred by the former Posts and Telecommunications Corporation (PTC) during the 1980s, 90s time-frame, well before both the current Board and management joined  TelOne. Mrs Ellen Chivaviro employment contract was not renewed and the Managing Director, Mrs Chipo Mtasa has been working without a contract for almost a year. It is known that Hon. Supa Mandiwanzira intends to replace them with his proxies and thus complete the capture of the Regulatory body, POTRAZ and SOEs in the ICT sector in Zimbabwe.
Recommendation:
It is recommended that the Government of Zimbabwe urgently undertakes the following:

  • Dissolve the Board of Directors of NetOne
  • Sending NetOne key management on forced leave, pending the outcome of investigations by a Commission of Inquiry. These are the Acting CEO, Brian Mutandiro, CFO, Mrs Sibusisiwe Ndhlovu, CTO, Mr Darlington Gutu and Executive Human Resources, Mr Kudakwashe Nyashanu.
  • Setting up a Commission of Inquiry into the operations of NetOne, covering the re-structuring exercise carried out in 2015, alleged payments of US$10 000 a week to Hon. Supa Mandiwanzira and the appointment of Megawatt Energy by the Minister for a consultancy fee of US$4million and whether the Minister was not conflicted and the alleged bribing of the Minister by ZTE, a company that is linked to Mr Li Xiaodong of Megawatt Energy. It is also alleged that similar payments are being done by TelOne to the Minister. The parcelling of advertising jobs to VPCG, after losing to Jericho. Hon. Supa Mandiwanzira is reportedly linked to the CEO of VPCG, Mr Reg Makuchete. The Commission of Inquiry to investigate the whole ICT sector, POTRAZ, TelOne, NetOne and Telecel.
  • An interim Board for NetOne comprising Ministry officials be set up under the Chairmanship of the Permanent Secretary, Dr Eng. Sam Kundishora.
  • Mr Ozias Bvute to be suspended as Chairman of POTRAZ to clear the way for those investigations.
  • Government to also investigate the eficacy of its acquisition of Telecel and the use of funds from the USF, including whether or not, there was a violation of the Postal and Telecommunications Act, Chapter 12:05 by the POTRAZ and the Minister.
  • The abuse of the USF in purchasing vehicles for the Minister and loans being advanced to bodies like ZIFA, clearly not intended for the purpose for which USF was established.

Yours faithfully,
Reward Kangai, CEng, MIET.
 

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